Mid-Morning Look

Friday, July 11, 2025

After strong stock market results the first 4-days of the week, U.S. markets are seeing a little pullback following the latest news/comments on trades and tariffs. U.S. futures slipped overnight, along with weakness in Europe and Emerging markets after late Thursday, President Trump on Truth Social posted a letter to Canadian Prime Minister Mark Carney, telling him that Canadian goods imported to the US would face a 35% tariff starting in August (up from the 25% level announced prior). In an interview with NBC News, Trump also floated 15% to 20% blanket tariffs on most trading partners, higher than the 10% level currently in effect. That is this morning’s top story with no major earnings results, or economic data this morning to speak of. Sector movers include the crypto space as Bitcoin builds on its record high yesterday, touching new highs above $118,000 overnight. Drone stocks seeing strength (AVAV, ONDS, UAVS, RCAT) after Defense Secretary Pete Hegseth eliminates regulations that restricted U.S. drone manufacturing and reveals a significant increase in domestically produced drones for the military. All eleven S&P sectors opened in the “red” led by materials and financial weakness after nine of eleven sectors were higher Thursday. The main focus this week has been the whirlwind of tariff announcements by the U.S. vs. trade partners, with over 20 countries given increased tariff figures, starting August 1^st if they don’t do a deal sooner.

• In Chemicals: WDFC reported Q2 results while raising FY25 EPS view to $5.30-$5.60 from $5.25-$5.55 (est. $5.52) and narrows FY25 revenue view to $600M-$620M from $600M-$620M; NTR was downgraded to Hold from Buy at Jefferies in ag chemicals noting Nutrien has benefited YTD from multiple disruptions in fertilizer supply but says positive earnings momentum near-term appears discounted: consensus revisions likely peak by mid-2026. The firm said once the EU approves GE crops, input efficiency as a new investor theme could drive a 50-100bps ($6-$12/sh.) derating. Covestro (COVTY) cut its full-year Ebitda outlook to a range of 700M-1.1B euros ($818.65 million-1.29 billion), down from a previously expected 1-1.4 billion euros (weighed on US listed chemical names early DOW, LYB).
• In Life Science and Tools: TMO upgraded to Outperform at Scotia, Reiterate Outperform for WAT and TECH and downgraded ILMN to Sector Perform on valuation noting over the first half of 2025, the large cap life science tools companies have under-performed the S&P 500, broader healthcare sector. With LST-13 now trading near the 10-year trough on a forward P/ E basis, Scotia believes the worst-case outlook for the group has been largely factored into valuations.
• In REITs: MAA was downgraded from Buy to Neutral at Goldman Sachs saying they find that while sunbelt demand (measured by gross absorption) is now outpacing supply, significant vacancy levels remain and will need to be worked through before pricing power improves. ADC, FVR were both downgraded to Equal Weight from Overweight at Morgan Stanley; ADC as best-in-class portfolio reflected in premium valuation and cut FVR on unexpected management transition, achieving economies of scale may take longer than expected and portfolio performance vs peers lag – said reiterate Overweight on NNN.

• LEVI +8%; shares rallied on earnings after Q2 adj EPS $0.22 topped the $0.13 consensus on sales $1.45B vs. est. $1.37B; raises FY25 adjusted EPS view to $1.25-$1.30 from $1.20-$1.25 and boosts its FY25 revenue growth view to 1%-2% from (2%) – (1%); lowers its full-year gross margin expansion.
• MSTR +2%; as the crypto/Bitcoin related names move higher with Bitcoin making new all-time highs overnight topping the $118,000 level and Ethereum moves above $3,000.
• NVDA +1%; a standout early in generally weaker semi sector on slight pullback for SOX index.
• PFGC +5%; after Bloomberg reported PFGC has attracted takeover interest from USFD a potential deal that would create a food distribution company with combined sales of roughly $100B, people familiar with the matter said according to a Bloomberg report. https://tinyurl.com/5ctc2ny4
• RCAT +23%; along with gains in other drone makers ONDS, AVA, KTOS, AVAV, UAVS after Defense Secretary Pete Hegseth eliminates regulations that restricted U.S. drone manufacturing and reveals a significant increase in domestically produced drones for the military.

• CAPR -28%; after saying the FDA has declined to approve its cell therapy deramiocel for a heart condition associated with Duchenne muscular dystrophy. The FDA said it needed more data to prove the therapy is effective.
• CRWV -5%; adds to weekly declines following its M&A deal to acquire CORZ; shares -20% this week alone.
• DOW -2%; as chemical names slip after Covestro (COVTY) cut its full-year Ebitda outlook to a range of 700M-1.1B euros ($818.65 million-1.29 billion), down from a previously expected 1-1.4 billion euros.
• FCX -2%; was downgraded to Neutral from Buy at UBS while raising its price tgt to $50 from $45 saying they remain constructive on the medium-term outlook for copper but expect a softening in demand/fundamentals to weigh on LME copper prices over the next six months.
• KPTI -16%; after saying it is reducing its workforce by 20%; expects its one-time expenses in connection with these actions to be immaterial; says board is evaluating financing and strategic alternatives.
• META -2%; following reports new EU charges could be in coming weeks, daily fines could follow shortly; the company is unlikely to offer additional changes to pay-or-consent model to EU.
• OSCR -4%; was downgraded from Equal Weight to Underweight at Wells Fargo and cut its tgt to $10 from $16 saying the pricing for most plans does not appear adequate to produce stable margins this year.